BILL ANALYSIS
AB 1977
Page A
Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Sandre Swanson, Chair
AB 1977 (Cook) - As Amended: April 5, 2010
SUBJECT : Department of Industrial Relations: ombudsman.
SUMMARY : Authorizes the Department of Industrial Relations
(DIR) to appoint an Ombudsman for Small Business, as specified.
Specifically, this bill :
1 Authorizes the Director of DIR to appoint an Ombudsman for
Small Business.
2)Charges the Ombudsman for Small Business with "providing
information and assistance to small businesses in California
that have difficulties in dealing with complex matters"
involving the Division of Labor Standards Enforcement (DLSE),
the Division of Workers' Compensation, and the Division of
Occupational Safety and Health.
3)Provides that the duties of the Ombudsman for Small Business
shall include the following:
a) Helping to disseminate information about upcoming
regulations and other pertinent matters to small
businesses.
b) Referring small businesses to the appropriate
specialists in state government and elsewhere for help with
particular needs.
c) Working with personnel of DIR and DLSE to enhance their
understanding of small businesses when they develop and
enforce workplace regulations.
FISCAL EFFECT : Unknown
COMMENTS : This bill authorizes DIR to appoint an Ombudsman for
Small Business, as specified.
Under existing law, Government Code section 11148.5 provides
that "each state agency that significantly regulates small
business or that significantly impacts small business shall
AB 1977
Page B
designate at least one person who shall serve as a small
business liaison." The statute provides that the small business
liaison is responsible for duties including the following:
Receiving and responding to complaints received by the
agency from small businesses.
Providing technical advice and assisting small
businesses in revolving problems and questions regarding
compliance with the agency's regulations and relevant
statutes.
Reporting small business concerns and, where
appropriate, reporting recommendations to the agency
secretary or to the agency head.
Reviewing and updating, on a semiannual basis, content
on the agency website that is accessible through a
specified small business link.
The statute also specifies that the small business liaison
"shall not advocate for or against the adoption, amendment, or
repeal of any regulation or intervene in any pending
investigation or enforcement action." (Government Code section
11148.5(d)).
The statutory requirement for a small business liaison was
re-established by SB 1436 (Figueroa) or 2006. Similar
provisions were first enacted in AB 505 (Wright) of 2000. These
requirements were repealed, however, as part of the elimination
of the Trade, Technology and Commerce Agency in 2003, until they
were reinstated by the 2006 legislation.
In addition, on March 29, 2006, Governor Schwarzenegger signed
Executive Order s-02-06 reinstating these requirements. The
Executive Order required every state agency, department director
and executive officer "to identify a Small Business Advicate at
the agency, department, board or commission level."
The website for the California Small Business Advocate
( www.sba.ca.gov ) provides a spreadsheet listing the small
business liaison for each state agency, including the California
Labor and Workforce Development Agency (LWDA) which oversees
DIR, the Employment Development Department (EDD) and several
other labor-related departments.
In addition, DIR's website contains a "DIR Small Business
AB 1977
Page C
Portal<1>" which contains useful information for small
businesses and states the following:
"DIR can provide you with valuable information to ensure
you comply with state
laws regarding workplace safety, labor law and workers'
compensation information.
By complying with state regulations, you are protecting the
health and well being
of your employees."
ARGUMENTS IN SUPPORT :
This bill is sponsored by the Associated Builders and
Contractors (ABC) of California.
ABC contends that labor laws in California are the most complex
laws in the country. Running afoul of these laws can lead to
costly litigation, impose tens of thousands of dollars in fines
and penalties, and even lead to business closures.
ABC states that employers now pay nearly half a billion dollars
($480,000,000) annually in various employer special assessments
that support the operations of the Division of Labor Standards
Enforcement, the Division of Occupational Safety and Health, and
the Division of Workers' Compensation. At the same time, there
is not one individual charged specifically with helping small
businesses navigate through the bureaucratic layers of the
various divisions.
ABC argues that in most states, it is an ombudsman's job to aid
in the resolution of administrative or regulatory problems in a
non-adversarial manner on behalf of small business. An
ombudsman is a neutral party that helps resolve disputes between
citizens and the government.
ABC contends that small businesses are frequently in need of
information and direction when it comes to dealing with the
large government entities. An ombudsman has broad powers to
investigate an agency's actions and make recommendations, but it
does not have legal authority to make an agency follow its
recommendations. In addition, an ombudsman does not provide
legal services for the citizen or the government. The ombudsman
---------------------------
<1> Accessible at http://www.dir.ca.gov/SmallBusiness/index.htm
AB 1977
Page D
also acts as a contact point where information can be found or
referrals made to special programs of interest to small
business.
ABC argues that this bill will help small businesses with
California's detailed workplace requirements by authorizing the
Director of the Department of Industrial Relations to appoint an
Ombudsman for Small Business. The Ombudsman will be charged
with providing information and assistance to small businesses in
California that have difficulties in dealing with complex
matters involving the Divisions of Labor Standards Enforcement,
Workers' Compensation, and Occupational Safety and Health.
ARGUMENTS IN OPPOSITION :
Writing in opposition to this bill, the California Labor
Federation, AFL-CIO states the following:
"There is no need for this legislation because Executive
Order S-02-06 already requires all state agencies to
identify a Small Business Advocate at the agency,
department, board, or commission level. Every agency is
also required to work closely with the Office of the Small
Business Advocate to provide engage in outreach, provide
assistance, and promote contracting opportunities.
In addition to the requirements of that Executive Order,
the Office of the Small Business Advocate's website
contains multiple resources for businesses seeking advice
on compliance. With one click, employers can request a
Cal-OSHA safety consultation. Another link to CalGOLD
provides information about all permit, licensing and
registration requirements. Another link contains all
relevant tax information for businesses, including tax
rates and reporting requirements. There is also a link to
Environmental Training Centers, which help employers comply
with Federal and California EPA, OSHA and other
Environmental, Health and Safety regulations. Lastly, there
is a link to EDD payroll tax seminars, which educate
employers about how to collect and remit state income tax,
disability tax, unemployment insurance, and employment
training tax. All of this information is readily available
and accessible.
If agencies are not complying with the Executive Order,
AB 1977
Page E
efforts should be directed at holding the Administration
accountable, rather than create a duplicative requirement
on the DIR."
The California Applicants' Attorneys Association (CAAA) opposes
this bill, arguing that it is duplicative and unnecessary. CAAA
states that DIR and its divisions are charges with protecting
the rights and responsibilities of employees and injured workers
as well as employers. They contend that a DIR Ombudsman for
Small Business would "imply an imbalance" in DIR's mission and
would create unnecessary new costs at a time when budget
constraints are forcing layoffs and furloughs throughout all
state agencies, including DIR.
PRIOR LEGISLATION :
AB 227 (Cook) from last year would have established a Labor
Standards Consultation Unit for the purpose of providing
consulting services to an employer or employee regarding
compliance with labor standards. Testimony was heard but no
vote was taken on the measure.
REGISTERED SUPPORT / OPPOSITION :
Support
Associated Builders and Contractors of California (sponsor)
Civil Justice Association of California
Opposition
California Applicants' Attorneys Association
California Labor Federation, AFL-CIO
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091